by: M. F. C. Ramos, Business World

THE SOLICITOR general plans to bargain with the US and European Union to give Philippine legislators and industries enough time given to fully comply with the World Trade Organization (WTO) ruling against the country's liquor tax.

“In negotiating with the US and EU, we must, as much as possible, get the best time or the longest time to be able to comply,” said Solicitor General Jose Anselmo I. Cadiz in front of the Ways and Means Committee yesterday. He added that negotiations for “the reasonable period of time” were part of the process.

According to Bureau of International Trade Relations of the Department of Trade and Industry assistant director Angelo M. Benedictos, past cases set the maximum period of time to about 15 months.

This comes after trade watchdog Appellate Body (AB) released its report recommending the August 2011 ruling of the WTO supporting the US and EU against Philippine excise taxes partial on spirits produced from locally sourced raw materials last December.

The AB recommended that the Dispute Settlement Body (DBS) request the Philippines to bring its current multi-tiered structure, which was found inconsistent with the GATT 1994 (General Agreement on Trade and Tariffs), into conformity with its obligations under that agreement.

As a WTO member country the Philippines must follow the recommendations of the panel report following the failed appeal, stating its intentions within 30 days from the report’s adoption to a DBS.

A “reasonable period of time” will be granted should immediate compliance prove impractical.

Mr. Benedictos explained that the three major parties have until April 19 to come to an agreement on the length of time for the implementation, after which another year will be given to complete compliance.

If the agreed time has lapsed without action on the state’s part, “the other party will be authorized to suspend concessions affecting Philippine products... until the Philippines has fully complied with the recommendations of the panel or the Appellate Body,” said Mr. Benedictos.

“We understand that depending on the discussions between the Philippines and the European Union and the Americans [the period of implementation] could be earlier or later,” Mr. Benedictos added.

Other countries with similar rulings against alcoholic beverages tax cases were granted sufficient time to comply.

Japan was given 15 months by the arbitrator from the day of adoption; Korea, 11 months and two weeks; Chile, 14 months and nine days.

“We have to strike a balance between our obligations as a member of good standing of the WTO and likewise we must not cross over the interest of Philippine nationals in this case,” Mr. Cadiz said.

Meanwhile, Distilled Spirits Association of the Philippines (DSAP) president Olivia Limpe-Aw showed support to extend the deadline for the compliance.

“It is best for the Philippine spirits industry that we try to maximize the reasonable period of time,” Ms. Limpe-Aw said.

“It gives us enough time to properly study what measures that would minimize the ill effects and the negative effects on the industry,” she added.

These negative effects, Ms. Limpe-Aw continued, would probably be felt by the sugar industry, a major component in the liquor industry.

“[It is important] that we continue to provide drinks that are affordable to the consumers while meeting our duty obligations and complying with the WTO decision,” she said.

Ms. Limpe-Aw, however, also admitted that the ruling would serve as an opportunity to enhance the goods they offer.

“It is also a way to force us to improve the industry to improve the products because now we are competing with the world,” she said.

While the DSAP president showed willingness to work with Congress, she, however, expressed worry over the unilateral tax structure which would open the $3-billion local market to global competitors such as America’s Jack Daniel’s and Jim Beam, and Spain’s Brandy de Jerez.

Source: Business World